Of Personal Computers and Cameras

Disclosure: I have for some time owned stock in Apple and Google, and still do

Sitting through Apple's big product roll-out yesterday I had a lot of thoughts beyond what Apple was announcing. One thought was "two industries as I knew them are now marginalized and dying."

Personal computer sales growth and camera sales growth are now tracking downward, with no end in sight. The problem is that they're being marginalized from below by convergent products (tablets and smartphones, respectively) while the industries haven't yet found a new hook to hang their development on. Both PCs and cameras are deep into incremental updating, and both see fewer and lower benefits from the increments. You can buy a faster PC today than yesterday, one with more core CPUs even, but does that help you write memos and emails or browse the Web faster? It really doesn't speed up most people's spreadsheets, contact lists, or other software they use regularly, either. Likewise, you can buy a camera with more megapixels and lower noise today than yesterday, but does that really help you create images for friends, your Facebook page, or your Web site? Even if you have a printer and dabble at prints, does a 36mp camera really net you better prints from your desktop inkjet than a 24mp one?

Apple's announcements may not have seemed like a lot at the user level—some new incremental models, a bunch of software updates—but at the core of all it was a shift that I think everyone in the tech industry probably noted and had a few shivers over. By taking software to free and pushing it further into integration between devices, other software, and even now enabling group editing, Apple actually just made a pretty strong statement that no one else can currently match.

The combination of free OS updates, free basic apps (word processing, spreadsheets, presentations, photo management, music creation, and video editing), coupled with state-of-the-art devices (phones, pads, and all variety of Macs), augmented with content via the App Store, and all tied together through iCloud is something that even Microsoft is going to have a tough time matching, for instance. Too much of Microsoft's revenue comes from the things Apple has just set free. Too many of Microsoft's devices (which come from many hardware partners with different visions of the future) don't integrate all that well to those disparate pieces, either.

Underneath all of Apple's announcements was a core foundation: we make great hardware, and we make it work greater by tying it together with free software that does things the user needs done.

Now, what camera maker can make that statement?

RED, BlackMagic, and GoPro seem pretty intent on trying to do something similar on a smaller scale in video, though each has huge gaps they still need to fill. Sony with their PlayMemories efforts seems to understand that we're in a communicating software world now, but their programmers let them down royally and the sum of the parts in the recent Sony offerings is less than actual the sum of the parts as a result. Canon and Nikon? Totally oblivious to the "enabled" future so far.

The problem for many of these companies is going to get worse if Apple is really able to pull off the Apple 4K TV that everyone expects them to launch about this time next year. Imagine that fingerprint sensor on the Apple TV remote (and/or your iPhone): the perfect V-Chip complement, as parents could set the TV parental guidelines to everyone's fingerprints in the household. TV-PG for the kids, maybe something a little broader for the teens, anything goes for the adults. But also think of the software integration: photos captured on your iPhone display on your TV at near full resolution, movies taken by the iPhone can be edited on your iPad and instantly previewed on your TV (via AirPlay). The list of software-integrated linkages goes on and on.

It's a good thing Apple doesn't make a real camera or camcorder. This tightly integrated software/hardware-coupled-with-content-and-cloud thing that they're bringing to full fruition now would be impossible for companies like Nikon to crack. Nikon's only choice would be to figure out a way to play along. Ditto for Canon, Fujifilm, Leica, Olympus, Panasonic, and Ricoh/Pentax.

There are only two companies that currently make cameras that are positioned in a way to be competitive to the future Apple is trying to build: Samsung and Sony. Samsung can certainly match Apple gadget for gadget, device for device, screen for screen. Indeed, all they seem to need is for someone to first show them which each gadget, device, or screen needs to be like and they'll have a clone of it within months. The big question mark at Samsung, though, is software. They're getting better at it, but because they are so much in total experiment or total mimic mode, there doesn't seem to be any clarity with where they're going with software. Worse still, they don't have content, so like Apple, will be dependent upon Hollywood for that, and I don't get the sense that Samsung is all that well integrated into the decision makers there.

Sony, on the other hand, is one of the content providers, and they know how to make great devices. Their problem is exactly where a lot of Apple's energy yesterday was devoted: software that ties everything together. A simple message to Sony: it ain't going to happen in Tokyo, fellows. You can certainly keep programming groups there—and would need to for Asian market-focused things, I think—but Sony needs a big time Silicon Valley crash software development team. One that is having lunch every day with the folk pushing the Web forward. One that touches elbows with the Apple development community. One that is closer to where the cloud is actually being created.

The three other big players are Amazon, Google, and Microsoft. While Google seems to have their act together with advertising these days, I fail to understand where all their Android effort is really profiting them. On the one hand, it's making their egos bigger, but Android is still free and Motorola is still losing a ton of money. As far as I can tell from their financials, the net impact of all their Android activity, including the Motorola Mobile group, is measured in hundreds of millions of dollars of loss a quarter. Google spent US$12.5 billion dollars on Motorola alone. And it's losing almost US$1 billion a year. Yes, the combined Android/Motorola investments probably allow Google to try to push smartphones to ubiquitous devices worldwide, but I'm pretty sure that would have happened without their investment. As far as I'm concerned, it was a dumb play, and likely to get dumber. Essentially it boils down to this: the one thing Google is good at (software), brings them no revenue at all, but the other two things that form the device of the future (hardware and content) are losing them money. Heck, we even have one big player who has content and has proven they can make hardware (Amazon), piggybacking on Google's free ride in software.

Microsoft, meanwhile, has been too slow to pivot. They've got all the ingredients, but they're unwilling to kill the cash cow in order to raise pigs. Uh, I mean goats. Okay, horses. With Nokia and Surface in house (plus don't forget the Trojan Horse X Box), every Windows licensee should be abandoning ship as fast as they can. Only problem: there aren't any other ships. Well, maybe Linux based personal computers. Hey, wait, there's that free OS from Google! Meanwhile, Microsoft is still stumbling its way towards great devices, and now Apple has challenged them to make software free on those devices.

Bill Campbell, my old boss and Apple board member, was up front in the auditorium at the launch. His body language body language was about as comfortable as I've ever seen it, though he seemed to every now and again grimace a bit at the on-stage delivery, which frankly, was rough. Tim Cook seems to have only one line he's able to segue to the screen with: "We've prepared a video, which we'd like to share with you now." Stiff and getting stiffer.

Where's this leave the camera world?

Same place as the personal computer maker world: on the outside wondering how they can partake of all that hardware/software/content goodness.

It's not difficult for me to imagine a camera that's a combination of hardware, software, and content, and which connects in to one of the growing worlds we're seeing emerge (iOS/OS-X, Android, Windows8ormore). But it seems like it must be for the camera makers. Cameras aren't about prints you hang in frames any more. That's just one of the many things that a modern camera should be able to do, not the main thing.

The camera makers have their work cut out for them. The longer they can't come to grips with the emerging cloud/device connected world, the more tempting it will be for companies like Apple to reach up and grab that market away from them. TV sets are on Apple's horizon for grabbing (at least the high end) away from the current players. Given that they've got Final Cut Pro, Aperture, iPhoto, iCloud Photo Sharing, a smartphone camera design group, how long will it be before Apple decides to disrupt the camera market, too? The one good thing going for the camera makers is that they only sold 60m units or so this year, so they look like a much smaller target to a company like Apple than some other targets. But I'll bet there's someone in Cupertino—the town where I grew up—that's sniffing around and thinking "might this be another 100m unit market if we disrupt it right?"

What was the George Patton quote? "Lead me, follow me, or get out of my way." Other than Apple, no one in the personal computer industry is really leading, and in the camera business we don't even have anyone trying to follow. That can't end well.